The benchmark TA-25 Index, which is up 13 percent this
year, will “outperform most of world markets in 2013,” Tel
Aviv-based Ori Licht, IBI’s head of research, said by phone
today. He pointed to the Nasdaq Composite Index, Germany’s DAX
Index and the S&P 500 Index. Israel’s measure has recovered
since a drop of 18 percent in 2011, the most in four years.

After under performing the S&P 500 and Nasdaq in the past
two years, the Israeli gauge is trading at 1.59 times book
value, compared with 2.67 times for the Nasdaq and 2.1 for S&P,
data compiled by Bloomberg show. Israel is due to start pumping
gas from the Tamar and Dalit fields in 2013, enabling the nation
to wean itself off its dependence on Egyptian gas for much of
its electricity generation. Egypt cut its flow to Israel this
year due to bombings along the Sinai pipeline, forcing companies
to switch to more expensive fuels.

“The direct impact of the Tamar field on gross domestic
product will be around 0.5 percent in 2013, but the indirect
contribution of cheap local gas to industrial companies’
profitability and to their competitive advantage is also very
significant,” Licht said today at a press conference in Tel
Aviv. He added that government regulations, including steps to
boost competition in telecommunications, will probably be put on
hold due to Israel’s planned elections in January, thereby
reducing pressure on some shares.

Local Supply

Tamar and Dalit are big enough to supply the country with
fuel for two decades. Houston-based Noble Energy Inc. holds a 36
percent stake in the Tamar field situated in the Eastern
Mediterranean, while local partners include Delek Drilling-LP
and Avner Oil Exploration LLP, whose shares are up by a
respective 3 percent and 2.5 percent this year.

Oil Refineries Ltd., whose shares have fallen 4.1 percent
in 2012, last month signed a long-term contract for as much as
$1.3 billion of natural gas from the Tamar field.

Expected infrastructure investments in the gas sector in
coming years will also help boost the revenue of companies that
take part in the projects and create jobs, Licht said. Woodside
Petroleum Ltd., Australia’s second-largest oil and gas producer,
this week agreed to pay as much as $2.3 billion for 30 percent
of Leviathan, the country’s largest gas field, which is set to
start production in 2016.